Share Growth Gains Fairly With Workers, Fairness Not Charity: CEA to Corporates
The CEA, however, argued that the debate over fairness should not be framed as a choice between workers and businesses.
New Delhi: Chief economic adviser (CEA) V Anantha Nageswaran on Monday said that India's economic growth could translate into meaningful transformation only when its gains are shared fairly between workers and corporates, stressing that fairness is not an act of charity but a condition for a healthy and sustainable market economy.
The CEA, however, argued that the debate over fairness should not be framed as a choice between workers and businesses. “Growth changes the country only when it is shared honestly between those who do the work and those who put up the money," he said at a keynote address at an event here.
Nageswaran also said that fairness, of course, is not charity, rather a sustainable market ultimately depends on consumers having enough purchasing power to buy the goods and services businesses produce. “A healthy market needs customers who can afford to buy, and those customers are, in the end, someone's workers,” he said.
Observing that capital deserves a fair return, he also said that there is an honest way to earn that return, and there is a self-defeating way. “If we hold down wages, delay paying suppliers, and keep the difference as profit, that becomes self-defeating. It works until the customers run out of savings. The honest way is to lower real cost, and some of that responsibility lies with the governments,” he said
On the government's part, Nageswaran also said that it must ensure cheaper power, affordable land, and reduce the compliance burden so that the cost of doing business is lowered. “Lowering the cost of doing business is at the core of what governments can and should do to create jobs. Governments do not themselves create lasting jobs. What they can do is to make it easier for economic activity to occur, and it is that activity carried out by businesses that creates jobs,” he said.
On India’s economic growth, he said that India's growth outlook was increasingly settled, with even cautious forecasts placing medium-term annual growth at around 6.5-7 per cent. “The economy grew 7.8 per cent in the first quarter despite headwinds from the West Asia crisis,” the CEA said.
“Growth measures how much larger the economy becomes each year. Transformation is about the character of that growth as to who benefits from it, how many workers move from insecure job into productive and stable ones, and whether households actually experience an improvement in their standard of living,” he said.